Editor's Note: This article is the third in a series that delves into Title IV-related issues contained in the House Democrats’ bill to reauthorize the Higher Education Act, the Aim Higher Act.

This article details the proposed changes in the Aim Higher Act affecting the Federal Supplemental Educational Opportunity Grant (FSEOG) and the creation of an emergency grant, as well as the Federal Work-Study (FWS) program.

Federal Supplemental Educational Opportunity Grant

The Aim Higher Act (AHA) would phase out the base guarantee portion of the institutional allocation in the Federal Supplemental Educational Opportunity Grant (FSEOG) program. Under the bill, from 2019 to 2023, the amount of base guarantee funding allocated to each institution would steadily decrease from 90 percent the first year to 80 percent the second year, 60 percent the third year, 40 percent the fourth year, and 20 percent the final year. By 2024, the base guarantee would be terminated. NASFAA’s Campus-Based Aid Allocation Task Force also recommended phasing out the base guarantee, but over a 10-year period. With the removal of the base guarantee, each future fiscal year’s funding would be solely based on a fair-share formula, an amount equal to the institution’s undergraduate student need from the preceding fiscal year. The undergraduate student need would be calculated as an evenly-split combination of an institution's appropriated amount of Pell Grant dollars and overall undergraduate student need.

Additionally, the bill proposes that FSEOG funds will not be made available to any institution that for two or more fiscal years, during any three-year period, has a student population comprised of less than 7 percent Pell Grant recipients.

The AHA would authorize funding for FSEOG at $1.15 billion in fiscal year 2019, all subject to the actions of the appropriations committees. Authorized funding for FSEOG would increase by an additional $150 million each year from 2019 to 2023, reaching $1.75 billion in fiscal year 2023. Currently, the program is funded at $840 million for the 2018 (award year 2018-19) fiscal year.

Emergency Grant Demonstration Program

The AHA also adds to the FSEOG program an emergency grant demonstration program, designed to increase completion rates by offering individual grants of $750 or less to address financial emergencies such as unemployment, unanticipated medical expenses, child care, transportation, or housing loss. Institutions would apply to participate in the program, and funding to selected institutions would require a minimum 50 percent non-federal match. Institutions would be required to provide a description in their applications on their eligibility for the program, including assurances that award decisions would be communicated to students within 48 hours of a request and funds would be disbursed to eligible students within 24 hours of approval. The demonstration program includes data collection and program evaluation provisions, including an annual report on the effectiveness of the program.

Federal Work-Study

Beginning with the 2019 fiscal year, funding for the Federal Work-Study (FWS) program would be authorized at $1.5 billion. FWS would then see authorization increases of $250 million in each succeeding year through 2023, when funding would be authorized at $2.5 billion. For the 2018 fiscal year (award year 2018-19), FWS saw funding levels of $1.13 billion.

The bill would replace the allocation formula with one similarly proposed for FSEOG, though it would also include graduate student need in the calculation, and include a “bonus allocation” for institutions that have demonstrated strong outcomes for serving and graduating Pell Grant recipients.

The bonus allocation would be for institutions with completion or graduation rates for their Pell recipients in the top 75 percent of all institutions eligible for the bonus allocation, with an overall percentage of Pell recipients in the top 50 percent of the eligible institutions, and with an annual increase in the completion or graduation rate of Pell Grant recipients in the top 50 percent of all eligible institutions. ED would reserve $30 million of the total FWS appropriated amount for this bonus allocation.

A federal work-based learning opportunities pilot grant would also be created under AHA to aid institutions in establishing or expanding programs that allow students to receive real-life work experiences.

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